IONDRIVE LIMITED — Capital/Financing Update 2012

Jul 4, 2012

ASX ANNOUNCEMENT

5 JULY 2012

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MEKONG MINERALS AGREEMENT TO INVEST UP TO US$5.7 MILLION INTO SOUTHERN GOLD’S ASIAN ASSETS

Southern Gold Limited (“Southern Gold”) is pleased to announce that it has finalised an earn‐in and shareholders’ agreement (“Agreement”) with Mekong Minerals Limited (“Mekong”) whereby, subject to the satisfaction or waiver of the conditions precedent, Mekong has the exclusive right to earn an interest in Southern Gold subsidiary, Southern Gold (Asia) Pty Ltd (“SG Asia”) and to manage the activities of SG Asia and its wholly owned subsidiary, Southern Gold Cambodia Ltd (“SG Cambodia”).

The Agreement regulates Southern Gold’s and Mekong’s obligations as shareholders of SG Asia. Under the Agreement, Mekong has the exclusive right to earn up to a 70% interest in SG Asia by sole funding US$5.7 million on expenditure of SG Asia and SG Cambodia.

On earning a 70% interest in SG Asia, Mekong will have the option to purchase Southern Gold’s remaining 30% interest in SG Asia (“Option”). The grant of the Option is conditional on compliance with ASX Listing Rule 11.4, including Southern Gold obtaining shareholder approval for the grant, if required.

Key terms of the Agreement

The key terms of the Agreement are as follows:

• Mekong will earn an equity interest in SG Asia by providing finance and management services to SG Asia and SG Cambodia.

• Mekong shall fund 100% of SG Asia’s and SG Cambodia’s expenditure up to US$5.7 million over three years and by doing so will earn up to a 70% interest in SG Asia. The funding is to be provided by way of shareholder loans that will convert to equity in SG Asia on the terms set out in the Agreement.

• Mekong has a minimum commitment to spend of US$1.0 million within the first 12 months from satisfaction or waiver of the conditions precedent. Mekong will earn its interest on a pro‐rata basis for each US$1 million expended. Mekong may elect to cease sole funding after it has expended the initial US$1.0 million at which point Mekong’s interest will be proportional to its expenditure at that point.

• Provided that Mekong earns a 70% interest in SG Asia, Mekong shall have an exclusive six month option to purchase the remaining 30% interest in SG Asia for US$4.5 million in cash plus a 1.5% net smelter royalty interest. Mekong can elect to make the payment of the US$4.5 million partly in cash and partly in fully paid ordinary shares in Mekong, or its holding company, provided Mekong or its holding company is listed on the Australian Securities Exchange (or other valid stock exchange). The grant of the Option is conditional on compliance with ASX Listing Rule 11.4, including Southern Gold obtaining shareholder approval for the grant, if required.

Southern Gold Limited 229 Greenhill Rd PO Box 255 email: info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 Dulwich Kent Town web: www:southerngold.com.au facsimilie 08 8368 8899 South Australia 5006 South Australia 5071

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• Mekong will appoint one director to the SG Asia board and the SG Cambodia board prior to earning 50% and thereafter will be entitled to appoint 2 directors to each board. The decisions of the board will be by majority vote other than certain critical decisions that will require a unanimous vote. While Mekong is sole funding expenditure the director appointed by it shall be chairman and shall have a casting vote.

• Mekong will manage the activities of SG Asia and SG Cambodia in accordance with programmes and budgets approved by the boards of SG Asia and SG Cambodia, as applicable. Mekong is entitled to charge a management fee.

• After the earning period each shareholder is obliged to contribute to expenditure in accordance with its percentage shareholding in SG Asia and by way of shareholder loans. A standard equity dilution formula will operate should a party elect not to contribute to a work program. If either party is diluted to a 10% interest or less, the diluting party is required to transfer all of its shares in SG Asia to the non‐ diluting party for nominal consideration and shall be entitled to a 1.5% net smelter royalty interest.

• In the event that a decision to mine is not unanimous then a buyout clause, where the proceeding party can buy out the non‐participating party’s interest in SG Asia for an agreed purchase price, will apply.

• In the event of a default, the non‐defaulting party has the option to purchase the interest of the defaulting party in SG Asia.

• Southern Gold and Mekong each have a first right of refusal upon sale of their respective ownership in SG Asia. Any other sale or any encumbrance over a party’s interest requires the other party’s consent.

• SG Cambodia’s joint venture arrangements with JOGMEC (referred to further below) will continue to apply to the Kratie South Project.

• The existing loans owed by SG‐Cambodia and SG‐Asia to Southern Gold will be forgiven (or assigned to SG Asia, in the case of the SG‐Cambodia loan) by Southern Gold prior to any shares being issued to Mekong.

• The Shareholders’ Agreement is conditional upon Southern Gold obtaining approval from the Cambodian Ministry of Mining and Exploration for the renewals applications of four tenements held by SG Cambodia which are currently pending, Mekong finalising legal due diligence over the tenements and being satisfied with its findings and obtaining JOGMEC’s consent to Mekong carrying out SG Cambodia’s management obligations under the Kratie South Letter Agreement. The conditions precedent are to be satisfied or waived within 90 days or as extended by the parties in writing, from the date or the agreement.

Southern Gold Managing Director Nanette Anderson said. “Entering into this Agreement is consistent with Southern Gold’s intention to focus on exploration, evaluation and development at the Bulong Gold project, Western Australia. Southern Gold looks to undertake this Agreement to release value by reducing our operating costs, while maintaining exposure to future upside in Cambodia.”

Mekong’s Director Anthony McClure said, “The Agreement with Southern Gold reflects an excellent opportunity to formalise arrangements to invest in “pioneer‐status and advanced exploration projects” in keeping with Mekong’s strategy of growing our business in Asia.”

Southern Gold Limited 229 Greenhill Rd PO Box 255 email: info@southerngold.com.au telephone 08 8368 8888 ABN 30 107 424 519 Dulwich Kent Town web: www:southerngold.com.au facsimilie 08 8368 8899 South Australia 5006 South Australia 5071

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Southern Gold and Mekong view the terms and conditions of the Agreement as being reflective and supportive of their respective corporate strategies. Further, that it recognises the success and efforts to date by Southern Gold and the staff of SG Cambodia and the requisite skills base of Mekong to enable future success in Cambodia.

Background on Mekong Minerals Limited

Mekong is an Australian unlisted public company incorporated for the specific purpose of acquisition, exploration and development of mineral properties in Vietnam, Laos and Cambodia.

Mekong is active in securing mineral projects that range from an early stage of exploration (pre‐drilling) to advanced exploration or development projects for main stream commodities such as gold, silver, copper, lead, zinc, nickel and other commodities.

Mekong currently manages a small team of resource industry professionals dedicated to targeting, acquisition and development of mineral projects.

For further information please contact:

Nanette Anderson Tony McClure Managing Director Director Southern Gold Limited Mekong Minerals Limited PO Box 255 Level 1, 143 Coronation Drive Kent Town, South Australia Milton, Queensland, Australia E: info@southerngold.com.au E: anthony.mcclure@mekongminerals.com W: www.southerngold.com.au W: www.mekongminerals.com

Southern Gold Limited 229 Greenhill Rd PO Box 255 ABN 30 107 424 519 Dulwich Kent Town South Australia 5006 South Australia 5071

email: info@southerngold.com.au telephone 08 8368 8888 web: www:southerngold.com.au facsimilie 08 8368 8899